Guest Post Written by David Vardy
PUB
INVESTIGATION INTO SUPPLY ISSUES AND POWER OUTAGES
Dark NL
sparked an investigation by the PUB into the reliability of our power system,
an investigation which is going into its fourth year. It has received little
media coverage, despite its great importance.
On January
20, 2017 the Public Utilities Board (PUB) issued an Order, P.U. 2(2017),
striking down expert evidence filed by the Grand River Keeper Labrador (GRK), a
registered intervenor. The Order is part of the PUB’s investigation into supply
issues and power outages which they announced on January 17, 2014. The
investigation covers matters relating to the reliability and availability of
power both before and after interconnection with Muskrat Falls and was prompted
by a number of power outages which took place in 2013 and early 2014. The
Board’s Order has the effect of removing expert evidence relating to two major
risks to the power system from further consideration during the investigation
into the supply of power. The purpose of this post is to recommend solutions to
this problem.
GRK Focus on
North Spur and Water Management
The GRK
focused its attention upon the availability and reliability of power from
Muskrat Falls both with respect to the North Spur and to the effectiveness of
the water management agreement on the Churchill River. In response to a motion
by NL Hydro, the PUB struck two
reports
prepared by Dr. Stig Bernander, an internationally recognized geo-technical
expert, concerning the stability of the North Spur. It also granted Hydro’s
motion to strike a report prepared by Philip Raphals of the Helios Centre
concerning the impact of the recent decision of the Quebec Superior Court upon
the ability of CFL(Co) to manage the water flows in the Churchill River, which
concluded that, should the court decision be upheld, the capacity available to Hydro to serve Island demand would be
far lower than the amounts claimed by the utility.
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| David Vardy |
The evidence
filed by GRK was opposed by NL Hydro on the grounds that the matters raised
were beyond the scope of the hearing. They argued that the Bernander reports
were related to engineering and construction and that the PUB had excluded such
matters from the investigation. And they, perplexingly, claimed that, while the
Court’s decision “may have an impact on the manner in which water will flow
from the Churchill plant and the timing of energy produced at Muskrat Falls”,
it nevertheless has no implications regarding the availability or reliability
of power.
The GRK has
argued that the remediation of the stability problems at the North Spur may be
inadequate and that further evaluation by geo-technical experts is necessary.
Unless adequate measures are undertaken in advance, any failure of the Muskrat
Falls dam would likely have catastrophic consequences for Island electricity
supply.
On the
question of the actual capacity at Muskrat Falls to which NLH will have access,
GRK’s evidence pointed out that Muskrat Falls relies on a Water Management
Agreement to which Hydro Quebec is not a signatory, which in turn relies on
Nalcor’s interpretation of the renewal terms of the Churchill Falls Power
Contract. The Quebec Superior Court decision clarifies the powers of Hydro Quebec
under the Renewal Contract, precluding the banking and withdrawal of power upon
which Nalcor is relying for Muskrat Falls to generate its full 824 MW
potential. GRK argues that, in order to properly assess the reliability of
Island power supply after interconnection, the PUB needs to be aware of the
amount of power that will be actually available to Hydro to meet its system
peak, which is far less than the 824 MW cited in Hydro’s documents.
The PUB
rejected these arguments, stating that the information in both reports “would
not add to the Board’s understanding of the issues or assist the Board in its
review and may serve to unduly complicate the review.”
Inconsistent
approach to generation and transmission
The power
outages three years ago prompted the PUB to investigate availability and
reliability. The PUB decided to break its investigation down into two phases:
the first relating to the Isolated Island system before interconnection with
Muskrat Falls and the second relating to post interconnection issues. Their
consultant, the Liberty Group, has now completed two reports, one for each of
these two phases.
The second
Liberty Group report deals at length with transmission issues after
interconnection, including the transmission line and submarine cables across
the Strait of Belle Isle, as well as with on-Island generation, but not with
issues at the Muskrat Falls generation site. Reports prepared for Newfoundland
Power and the Consumer Advocate also deal with design issues associated with
the transmission line but steer clear of the Muskrat Falls site.
Both water
management and the North Spur are issues relating to the generation component
of our electric power system. The PUB has been inconsistent, both in its
conduct of the investigation and in its ruling on GRK’s evidence. The PUB has
allowed the production by Newfoundland Power and the Consumer Advocate of
expert evidence concerning the reliability of the transmission components of
the Muskrat Falls Project, and indeed has mandated its own experts (Liberty) to
look into these questions. However, it has confined its investigation of
generation issues to sources on the Island, excluding Muskrat Falls. The effect
is that, in its investigation into reliability of the post-Muskrat system, the
PUB is acting as if it had jurisdiction over the transmission components of the
Muskrat Falls Project, but not the generation component. The 2013 Muskrat Falls
Project Exemption Order, which removes the Muskrat Falls project from PUB
jurisdiction, makes no such distinction.
Recommendations
The other
intervenors include Newfoundland Power, Industrial Customers, Vale, Danny
Dumaresque and the Consumer Advocate. None of these intervenors took a position
with regard to NL Hydro’s motion to strike the GRK reports. The Consumer
Advocate did however make a submission arguing that it would be premature to do
so. The GRK must now decide, and quickly, if it will appeal the decision of the
PUB to the Appeal Division of the Supreme Court. However, the cost of pursuing
an appeal may well be beyond its reach.
My first
recommendation is to the Consumer Advocate. Given the importance of
post-connection reliability to Island consumers, the Consumer Advocate should
offer to join in such an appeal, in order to ensure that all matters relating
to availability and reliability of power are addressed by the Board. By so
doing the Consumer Advocate will be discharging his mandate to protect the
consumer by ensuring “lowest cost consistent with reliable service.”
My second
recommendation concerns the Muskrat Falls Project Exemption order, issued by
the provincial government in 2013, which removed the Muskrat Falls project,
including both transmission and generation, from the jurisdiction of the PUB.
This Order reaffirmed an earlier Order which had been issued at a time when
Lower Churchill development was intended principally for export rather than use
by local consumers.
The
government should remove the fetters upon the PUB imposed by the Exemption
Order (O.C. 2013-342) so that the Board will be able to examine all matters
relating to reliability and availability of power, as well as matters relating
to its cost, which have up to now been outside of its jurisdiction. This can be
done by rescinding the Order.
Rescinding
the Exemption Order would significantly improve the oversight and independent
assessment of the Muskrat Falls project and would be a vital component of
government’s commitment to improved transparency and accountability. It would
restore the full powers of the PUB and allow it to embark upon an
all-encompassing inquiry into the reliability and availability of power.
Immediate action by government would empower the PUB to discharge its duty in
the investigation into supply issues and reliability of power and to ensure
that the electrical power system is sufficiently robust to maintain an adequate
power supply at all times.
David Vardy
